Ramesh G. Bhatia vs Gopala Gases Pvt. Ltd. And Ors.
1994 Latest Caselaw 152 Del

JUDGMENT

P.K. Bahri, J.

(1) This petition has been filed under Section 433 read with Section 438 of the Companies Act seeking winding up of the respondent-company.

(2) This company was incorporated in February 1980 as a private limited company with a nominal capital of Rs.1,60,000.00 divided in to 1,60,000.00 equity shares of Rs.10.00 each. The paid up capital of the company is Rs. 15,14,550.00 and the authorised preferencial shares capital of the company is Rs. 9,00,000.00 divided into 90,000 preferencial shares of RS.10.00 each and the paid up preferencial capital of the company is only Rs. 8,50,000.00. The petitioner is having 7500 equity shares of value of Rs10.00 each in this company.

(3) The company was carrying on the business of manufacturing industrialgases. Another company by the name of M/s. Uttam Air Products Private Limited was already functioning and the petitioner and respondent No.2 are Directors of that company. Respondents 2 & 3 are real brothers and are Directors of respondent No.1 company. The company owns a factory premises at Mandi Gobindgarh,Punjab and admittedly, the petitioner was supervising and managing the operations of the factory at Gobindgarh although the petitioner resided at Chandigarh.

(4) Initially, it is averred that the company achieved a great success and earned a reputation and received recognition from the authorities for the good work done in that factory. It was alleged in the petition that respondents No.2 and 3, taking advantage of the majority share-holding, had started pilfering and misappropriating the funds of the company and had committed oppressive acts against the minority share-holders and some of the minority share-holders have already filed a petition under Sections 397 and 398 of the Companies Act which is Company Petition No.221 /89 which is still pending in this Court. It is, further, alleged in the petition that it is the mismanagement on the part of the respondents 2 & 3 that has caused closure of company's business inasmuch as the factory of the company is lying closed since October 1988 and no business of the company, which was contemplated by its Articles of Association, is being done since then. It is averred that as the company has not been carrying on any business for more than a year since 1988, the company is liable to be wound up and it is also pleaded that it is just and equitable to wind up this company inasmuch as respondents 2 &: 3 have committed various acts of mismanagement and malfeasance and thus the substratum of the company has been lost. Various instances of such mismanagement and malfeasance have been detailed out in the petition. It was pleaded that the petitioner is a closely held family concern and as mutual confidence has been long lost amongst its major share-holders, it is, thus, just and equitable that this company should be wound up.

(5) The respondents have contested the petition and have pleaded that it is due to the mismanagement of the factory of the company by the petitioner himself that the business of the company had come to a stand-still. It is averred that a large number of criminal and civil cases have been filed against the petitioner and his associates which are still pending. It is alleged that the petitioner had sold away and misappropriated precious property of the company i.e. imported cylinders and necessary legal action had been taken against the petitioner for recovering the cost of the said cylinders and the suits have also been filed against the parties to whom the said cylinders have been fraudulently sold for a very low consideration.It is pleaded that it is the petitioner who has been misappropriating the funds of the company and thus, it is not a fit case for ordering winding up the respondent No.1company. It is alleged that the Company Petition No.221 /89 has been got filed by the petitioner through his close relations.

(6) The admitted facts are that the respondent No.1 company has not been carrying on any business since 1988. It is true that the Court is not to order winding up of a company which has the capacity and the plan to restart its business. It is admitted case that the respondent No.1-company has taken loan of about 12 lakhs from the other company in 1989, yet the company has not been able to revive itsbusiness.

(7) Counsel for the respondent has argued that business of company could be revived as soon as the company is in a position to recover its dues from the petitioner and others for which the legal proceedings have already been instituted.He has referred to Printersall(P)Ltd. v. Syndicate Bank, 1981 (51) Company Cases5. In the said case, the company was formed in 1966 and the company had not been able to carry on its business since 1975 and it was found that the company ceased to have any place of business or machinery to carry on its business and as the substratum of the company had gone, the Court directed that it is a fit case for winding up. I do not understand how this judgment is of any help to therespondent. In the present case also, the respondent No.1 has not been able to carryon any business since 1988 and despite taking heavy loan from the sister company,the respondents have not been able to revive the company. The respondents have not disclosed any future plans from which it could become apparent, pnmafacie,that business of this company can be revived.

(8) He has then placed reliance on Smt. Mridula Bhaskar v. Ishwar IndustriesLtd., 1985 (58) Company Cases 442. In the said case, it appears that the company had been revived during the pendency of the proceedings and the Court held that taking into consideration the balance-sheet filed by the company, the company had not only a hope of revival but had in fact been revived inasmuch as it had made profits and had also paid Rs.12 lakhs to three financial institutions towards itsdebts. The case is distinguishable on facts. At any rate, at this stage, this Court is only to see whether prima facie the respondents have been able to satisfy this Court or not that there is a possibility of the business of the company being revived in any near future.

(9) The question to be decided at the present stage only is whether the petition should be admitted nor not. The question whether the wind ing up order should be made against this respondent-company would arise for consideration after THE petition is admitted and parties are given sufficient opportunity to substantiate their pleas by leading some evidence by way of affidavits or otherwise. It is also to be kept in view that this company is a family concern of the parties and there has occurred a deadlock in the company inasmuch as the said close relations which are holding this company have fallen out and have stopped having mutual confidence in each other.

(10) One of the contentions raised by the learned Counsel for the petitioner was that the respondent-company has done some business which was not provided for as one of the objects of the company and that also should lead this Court to hold that it 'is just and equitable to wind up this company. It appears that only one transaction of import of some cloves has been undertaken by the company from which thecompany had earned profit, so it cannot be said that on that ground the company is liable to be wound up.

(11) However, in view of discussion above, this petition is liable to be admitted on the ground that the business of the company has come to a stand-still for the last six years and prima facie, there appears to be very little possibility of the business being revived. So,' I direct that the petition be admitted and the citations bepublished.in the Newspapers 'Statesman', 'Navbharat Times' and Delhi Gazette.The matter be listed for further proceedings in Court on 8/08/1994.

(12) For hearing arguments in this application, the matter be listed on 8/08/1994.DELHI High COURTPresent: Mr. Mahinder Narain, J.WILLIAM Grant & Sons LTD. - Appellant versus McDOWELL & CO. LTD. - RespondentI.A. No. 9721/93 in Suit No. 2532 of 1993-Decided on May, 1994(i) Trade & Merchandise Marks Act, 1958 - Section 2(j) - Copy Right Label - Definition - Device affixed by a manufacturer on a product/article -Contains material placed upon it - To distinguish his goods from the goods of the other - Contains information regarding the nature and quality of the product or goods - Whether correct? - (Yes) - Whether label, is copyrightablematter? - (Yes).Held: In my view, a label is a device which is affixed by a manufacturer on a product/article and contains material placed upon it by the manufacturer of the goods so as to distinguish his own goods from the goods of the other manufactur-ers, and contains information regarding the nature and quality of the product, or goods to which the label is appended or affixed. (Para 36)Held further: In my view when a manufacturer skilfully blends the factualinformation, with some features on the label which are intended to distinguish his own product from the products of other manufacturers, and, the blending of the factual information and their distinguishing features is achieved in a manner which combines the aforesaid particulars and features as unified whole, or a representa-tion, then such a representation is a label, which, depending upon the manner in which the various features are harmonized with other of them, may give rise to a claim of the label being "artistically" made, and actually being so, and, thus, by itself being copyrightable matter. (Para 45)(ii) Passing off-Compare the whole labels - Similarities - Defendant wished to make its label a close approxmareputation-Especiallysotion of the label of the plaintiff -Likelihood of deception-Would lead to erosion of the reputation-Especiallyso in. the case of potable products which cannot bear a mark and only their containers can have label - Glenfiddich whisky -Existed prior in time - Whether entitled to protection of reputation? - (Yes).Held: In view of what I have stated above, I think that in cases of trans-borderreputation, the question of likelihood deception losses it ssignificance in passing offaction, and what becomes more important, is whether use of something by thedefendant, out of the whole used by the plaintiff, is deceptively similar to what is